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Our Average Net Worth By Age: How Do You Compare?
How do you compare to the average American when it comes to building wealth? Is wealth even what you think it is? You might be surprised!
Financial expert & writer
Thanks to the availability of cheap and easy credit, it’s pretty darn easy to appear wealthy when you’re not.
Just picture the Joneses with their large, stately home and white picket fence, two shiny new cars in the driveway, a backyard pool, and designer duds from head to toe. If you think they actually own it all, you’re probably in for a shock.
In reality, owning items of value isn’t how the Joneses keep up appearances and it isn t really the American way. Instead of saving cash to buy what we want, we borrow the money then brag of our good fortune.
And that s exactly why the average credit card debt for households in debt surged over $1,500 last year. Because if we can afford the monthly payments on whatever it is we desire, we can convince ourselves we can afford anything we want.
The Real Measure of Wealth: Your Net Worth
But, that’s where reality ends and the truth begins.
Think about it; in reality, “owning” a huge and expensive mansion adds nothing to your wealth if you owe exactly what you paid, and the same can be said for cars, boats, and other big toys.
And if you owe a lot of money on credit cards or student loans, that amount can easily dwarf the sum of cash you have in the bank.
That’s why many experts suggest that there is only one real measure of wealth – your net worth. Your net worth is a figure you can reach by subtracting your liabilities from your actual assets.
Since your net worth actually compares your debts to your assets, it is the ultimate truth teller.
When you use net worth as a measure of wealth, you can’t hide behind fancy homes or expensive clothing – because, if you owe money on it, your net worth will show.
Household Net Worth by Age
Sadly but not surprisingly, the average net worth of Americans is paltry. Generally speaking, that’s because we save too little, spend too much, buy liabilities instead of assets, and piss away our discretionary income on pointless crap.
The chart below shows median net worth by age, which properly illustrates the results of our often irresponsible behavior.
Using Census Bureau data from 2011 (the last year the government reported figures for net worth) , it’s easy to see how many of us have failed ourselves financially.
Imagine how the 50 th percentile of those ages 35 – 44 has a household net worth of just $35,000 – and that figure includes everything they own, any equity in their homes, and their retirement savings to boot.
That s sad considering those ages 35 and older have had probably been out in the workforce for at least ten years at this point.
And even the 50 th percentile of those ages 65+ aren’t doing much better; they’ve got a median net worth of around $171,135, and quite possibly decades of retirement ahead of them.
How do you think that is going to work out?
As the Motley Fool pointed out in their net worth comparison, an individual age 65 or older who has the median net worth of $171,135 in cash and investments could only count on $7,000 per year in living expenses.
While that might be okay for someone who has other income streams to rely on, like social security, it will likely spell financial disaster for others in this predicament.
Find Out Where You Stand with Personal Capital
If you’re like most people, you’re probably wondering about your own net worth right about now.
If net worth is the true measure of wealth, and it is, then finding out your own net worth is easily the best way to assess your own finances – and find room for improvement.
Fortunately, this step has been made easy by Personal Capital. By signing up for a free account with Personal Capital and linking all of your accounts, you can find out your net worth for free.
Personal Capital helps you quickly figure out your networth and grow it over time.
You ll also benefit from receiving regular updates to your net worth as you pay down debt, grow your investment portfolio, and make incremental changes that boost your wealth over time.
Personal Capital even helps you accelerate your wealth building by identifying hidden fees in your investment portfolio.
It only takes a few minutes and it can change the way you build wealth forever. You can get your free account here.
Here s a quick look behind the scenes at how Personal Capital makes it easy to quickly figure out your net worth, and how you can grow it.
If you want to get started with Personal Capital, just click here. If you don’t want to join Personal Capital for any reason, you can always figure out your net worth the old-fashioned way, too.
To accomplish this task, you’ll take out a piece of paper and create two columns – one for assets and the other for liabilities.
In the asset column, you’ll write out everything you “own,” including cash in the bank and your retirement and investment accounts. In the liability columns, you’ll tally up all your debts. Once you subtract your liabilities from your assets, you ll arrive at your net worth. Brace yourself.
Here’s what net worth could look like for the average person with a mortgage, two cars, retirement accounts, and student loan debt: